China manufacturing shrinks in May despite trade war truce

China’s manufacturing activity contracted for the second consecutive month in May, official data released on Saturday revealed. This slowdown occurred despite Beijing reaching a temporary ceasefire in its intense trade dispute with the United States, although US President Donald Trump accused China on Friday of breaching the de-escalation agreement.

While a temporary truce was established in mid-May, China’s factory output still registered a contraction for the month. The Purchasing Managers’ Index (PMI), a key indicator of industrial output, stood at 49.5, according to the National Bureau of Statistics (NBS). This figure, while an increase from April’s 49, remains below the crucial 50-point threshold that distinguishes growth from contraction.

NBS statistician Zhao Qinghe stated that China’s overall economic output in May “continued to expand.” He noted that some “US-related enterprises” reported that foreign trade orders “restarted at an accelerated pace, and import and export conditions improved.”

The non-manufacturing PMI, which tracks activity in the services sector, recorded 50.3, a slight decrease from 50.4 in April.

Chinese leaders have set an economic growth target of five percent for this year, a goal many economists view as ambitious given the country’s struggle with weak domestic consumption.

Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, commented that “economic momentum is stable” despite the challenging operational environment for companies. He highlighted that “Firms in China and the US with exposure to international trade have to run their business under persistently high uncertainty.”

Although Beijing and Washington agreed to a 90-day pause on steep tariffs this month, negotiations between the two economic powers already appeared to be at an impasse. President Trump asserted on Friday that Beijing had “totally violated” the bilateral deal, without providing specific details.

This article has been posted by a News Hour Correspondent. For queries, please contact through [email protected]
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